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Redwire Corporation's (NYSE:RDW) Path To Profitability

We feel now is a pretty good time to analyse Redwire Corporation's (NYSE:RDW) business as it appears the company may be on the cusp of a considerable accomplishment. Redwire Corporation, a space infrastructure company, develops, manufactures, and sells mission critical space solutions and components for national security, civil, and commercial space markets in the United States, Luxembourg, Germany, South Korea, Poland, and internationally. The US$169m market-cap company posted a loss in its most recent financial year of US$62m and a latest trailing-twelve-month loss of US$118m leading to an even wider gap between loss and breakeven. The most pressing concern for investors is Redwire's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

Check out our latest analysis for Redwire

According to some industry analysts covering Redwire, breakeven is near. They expect the company to post a final loss in 2023, before turning a profit of US$1.0m in 2024. So, the company is predicted to breakeven just over a year from today. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 85% is expected, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
earnings-per-share-growth

Underlying developments driving Redwire's growth isn’t the focus of this broad overview, however, keep in mind that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

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One thing we would like to bring into light with Redwire is its debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of Redwire which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Redwire, take a look at Redwire's company page on Simply Wall St. We've also put together a list of important factors you should further research:

  1. Historical Track Record: What has Redwire's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.

  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Redwire's board and the CEO’s background.

  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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